By Anadi Soni
“This dignitary or officer is probably the most important officer in the Constitution of India. He is the one man who is going to see that the expenses voted by Parliament are not exceeded or varied from what has been laid down by Parliament in the Appropriation Act.”
Dr. BR Ambedkar
Introduction
The Constitution of India established an independent office of the Comptroller and Auditor General (hereinafter as CAG) of India. He is the head of the audit and accounting department in India. He is the treasury manager and controls the entire country’s financial system.
On two levels: middle and state. They are responsible for complying with the Indian Constitution and the laws of the Parliament in the field of financial management.
The President appoints the Auditor-General and the Auditor-General to exercise all powers related to the Union and National Accounts. The constitution guarantees the independence of Auditors and Auditor General.
On August 7, 2020, Girish Chandra Murmu was appointed as the new India Chief Financial Officer and Auditor General (CAG). He was the deputy governor of Jammu Kashmir.
Before him, Rajiv Mehrishi took over CAG on September 25, 2017. The agency is responsible for external and internal audits of national and state government expenditures. It is often referred to as the CAG of India.
In this article, we will briefly introduce the CAG office and its functions.
History
Sir Edward Drummond became the first Auditor General in 1860 and used the term “Comptroller and Auditor General of India” was first used in 1884. With the Montford Reforms of 1919, the Auditor General became independent.
The Government of India in 1935 strengthened the position of Auditor General by establishing Provincial General Auditors General in a federal structure.
Salary
Article 148(3)
The salary and other conditions of service of the Comptroller and Auditor General shall be such as may be determined by Parliament by law and, until they are so determined, shall be as specified in the Second Schedule.
Provided that neither the salary of a Comptroller and Auditor General nor his rights in respect of leave of absence, pension or age of retirement shall be varied to his disadvantage after his appointment.
Comptroller and Auditor-General is paid a salary which is equal to the salary of the Judge of the Supreme Court, Provided that if a person who immediately before the date of assuming office as the Comptroller and Auditor-General, was in receipt of, or, being eligible so to do, had elected to draw, a pension (other than a disability or wound pension) in respect of any previous service under the Government of the Union or any of its predecessor Governments, or under the Government of a State or any of its predecessor Governments, his salary in respect of service as Comptroller and Auditor-General shall be reduced-
- By the amount of that pension; and
- If he had, before assuming office, received, in lieu of a portion of the pension due to him in respect of such previous service, the commuted value thereof, by the amount of that portion of the pension.
CAG’s salary and other working conditions shall be stipulated in the second appendix of the constitution until it is decided by the parliament. Once appointed to this position, your salary and entitlements will not change due to your preferences.
Appointment of Comptroller and Auditor General of India
Article 148 of the Constitution of India talks about the appointment, removal, oath and conditions of service of the CAG.
Art 148(1) There shall be a Comptroller and Auditor-General of India who shall be appointed by the President by warrant under his hand and seal and shall only be removed from office in like manner and on like grounds as a Judge of the Supreme Court.
Term of office
The term of office is six-year from the date on which he assumes such office. Provided that where he attains the age of sixty-five years before the expiry of the said term of six years, he shall vacate such office on the date on which he attains the said age.
He may resign his office at any time by writing a letter to the President and will only be removed on the grounds of proven misbehavior or incompetence in a speech to Parliament in the manner provided in clause (4) of Article 124 of the Constitution of India.
However, this can only be carried out after sufficient investigation and test procedures. After retirement or resignation from office, he is no longer entitled to a position or office in the central or state government. When you retire, you will receive your annual pension.
Functions of the CAG of India
The constitution in Article 149 provides the legal basis for Parliament to prescribe the duties and powers of the CAG in relation to the accounts of the Union and the States as well as any other authorities or bodies.
DPC was passed in parliament in 1971. The DPC Act was amended in 1976 to segregate auditing accounts in the Government of India.
The duties and functions of the CAG as set out in the Constitution are:
- Audit of the accounts relating to all expenses incurred by the Consolidated Fund of India, the Consolidated Fund of each State, and the Consolidated Fund of each Territory of the Union, which conducts a Legislative Assembly.
- Audit of all spending drawn from the Indian Emergency Fund and Indian Public Account, as well as from the Emergency Fund and State Public Accounts.
- Profit and loss accounts, balance sheets, and other subsidiary accounts of a department of the central and state governments are managed by him.
- He reviews the income and expenditure of the Government of India and each state to ensure that the related rules and procedures are designed to provide effective verification of the valuation, collection, and proper allocation of income.
- Examination of the income and expenditure of the following points: All Heis and authorities financed mainly with central or state income; Government company; and other companies and agencies if required by applicable law.
- Review of all central government and state transactions related to debt, declining funds, deposits, advances, transitional accounts, and remittance transactions.
- Review of receipts, share accounts, and others with permission. of the President or at the request of the President. Check the accounts of other agencies if the president or governor instructs you to do so. For example, checking local bodies.
- Advising the President on prescribing the manner in which the accounts of the Center and the States are kept (Article 150)
- Submitting audit reports relating to the accounts of the Central Government to the President, who shall, in turn, place them before both the Houses of Parliament (Article 151).
- He checks whether expenditure made is in the public interest or not.
- Submit audit reports to the governor relating to the accounts of a state government, who in turn submit them to the state legislature (Article 151).
- Ascertaining and certifying the net proceeds of any tax or duty (Article 279). The certificate is final. The “net product” means the product of a tax or fee less the cost of collection.
- Acts as a Parliament’s Public accounts Committee guide. Create and maintain state government accounts. In 1976, he was relieved of the responsibilities regarding the compilation and maintenance of accounts of the Government of India due to the separation of accounts from audit, through departmentalization of accounts. The CAG submits three audit reports to the President:
- Audit Report on Appropriation Accounts
- Audit Report on Finance Accounts
- Audit Report on Public Undertakings
The President submits these reports to both houses of parliament. The audit committee then reviewed it and reported its findings to the parliament.
Case laws
Arvind Gupta Vs. Union of India (2013)
Before Hon’ble Judges R.M. LODHA AND ANIL R. DAVE,
This judgment talks about the powers of Comptroller and Auditor general to conduct performance audit. This case was decided by the Supreme Court.
In this case, the petitioner alleges that the CAG of India is not empowered to provide a performance audit report and the provisions of the Audit and Accounts Regulations, 2007 set out in the CAG (DPC) Act of 1971, which says that CAG can not conduct performance audit as it is violates the Constitution.
The Supreme Court ruled that the functions of the CAGs to conduct the review of the economy, efficiency, and effectiveness with which the government has used its resources were incorporated into the 1971 Act. Performance test reports prepared in accordance with the regulations should be considered accordingly.
As per the article 149 of the Constitution of India, the CAG shall perform all such functions and exercise his powers in relation to the accounts of the Union and States and any other agency or body as prescribed or as required by law enacted by Parliament.
In pursuance of Article 149 of the Constitution, Act of 1971 was enacted. Section 16 states, among other things: 16 Audit of Union or State Revenue – It is the duty of the Auditor and Auditor General to review all revenue paid to the Consolidated Fund of India and to each state and Union territory that has a legislative assembly and to be satisfied.
Even the rules and procedures on this behalf are designed to ensure effective control over the valuation, collection and proper distribution of income, to be properly observed and, for this purpose, to conduct the audit of the accounts it deems appropriate and informed the respect.
The Court found no unconstitutionality in the regulations and thus dismissed the petition.
National Dairy Development Boards Vrs. CAG of India.
In The High Court of Delhi , Before Hon’ble Justice Sanjeev Khanna,
This case examined the CAG’s powers to conduct audits under Sections 14, 15 and 19 of the CAG (DPC) act. Here, the authority of the CAG to exercise its powers under Sec 14 (2) of 1971 Act to conduct audit of accounts of the NDDB which is governed by its own Act that is NDDB Act of 1987 was challenged in this case by the petitioner.
NDDB Act provides a provision that has priority over other laws. The court here made few provisions and held that CAG can carry out audits in accordance with Section 14 (1), 14 (2) or 15 of the CAG Act in relation to any company if it carries out an annual financial audit in accordance with the relevant legislationit is not carried out by the CAG.
Conclusion
Although India’s auditor-general and auditor-general institutions are very important to the parliamentary system of a democratic country like India, the decline in public awareness of the importance of the institution has suffered time and time again.
In modern politics, many CAG reports are less popular and not all of them are discussed in parliament to improve the effectiveness of Indian auditors and auditors as constitutional officials responsible for maintaining and monitoring accountability and protecting government responsibilities.
For those in power, it is important to make the audit reports issued by CAG public and provide opportunities for wider public discussion.
Arun Kumar Aggarwal vs. Union of India
In the Supreme Court of India in the bench of Hon’ble Justice K. S. Radhakrishnan & Justice Deepak Misra the questioned came whether a CAG Audit Report can be accepted alone to grant relief or as a basis for initiating action by the court or not.
It was held by the Court that CAG’s Report is always subject to scrutiny by the Parliament and that it is for the Parliament to decide upon the receipt of the report that whether it should make its comments on the CAG’s report or not.
The role of the PAC (Public Accounts Committee) and the procedure that is followed in the House indicates that CAG report is always under scrutiny by the Parliament and the Government can give its view on the report of the CAG in any case.
The question which goes here for court’s consideration is whether this court can grant relief only by keeping reliance on the CAG’s report? The CAG’s report is subjected to parliamentary debates and PAC can either accept or reject the ministry’s objection on the CAG report. The CAG is undeniably an independent constitutional official, but it is parliament that decides afterwards.
We can point out, however, that since the report is from a constitutional officer, it calls for respect and cannot be set aside as such. The department can at any time indicate whether the CAG report contains errors or whether the CAG has not properly assessed the various problems.
References
Articles
Case laws
- . Arvind Gupta Vs. Union of India(2013) Supreme Court Cases 293 Writ Petition(C) No. 393 of 2012, decided on October 1, 2012
- . National Dairy Development Boards Vs. CAG of India. In The High Court of Delhi W.P. (Civil) 4834 OF 1998Decided on: 27-1-2010
- Arun Kumar Aggarwal Vs. Union of Indian (Civil) 469 Decided on: 9-5-2013